3 ms·

This is great, but I'd love to see a post on selling a side business (no outside investment) and less than $10,000 a month in MRR.

imjk 9y ago
https://training.kalzumeus.com/newsletters/archive/selling_software_business https://training.kalzumeus.com/newsletters/archive/selling_s...
tlb 9y ago
Buying small websites is a hard business, because you have to maintain them. If one engineer can maintain 10 sites, it costs $2k/mo to maintain each, so the gross profit has to be well above that to make a business out of it. Maintaining 10 sites, each written independently with their own tooling choices, requires an engineer with a very large cranium.
- thomaslangston 9y ago
  It can be done if you pair it with an agency model. You keep multiple devs on hand who treat the sites as internal clients. Over time if you keep making acquisitions, you have less and less need to keep the external client pipeline full. Example - http://www.simplefocus.com/ http://www.simplefocus.com/
jacquesm 9y ago
Find a couple of your competitors and set up a bidding process, that is probably the best way to get the maximum out of a company like that. Aim for 10 years net or so, and be sure to stipulate that you reserve the right to refuse all offers. I've written up a HN thread about this subject a long time ago: https://jacquesmattheij.com/how-to-sell-your-company https://jacquesmattheij.com/how-to-sell-your-company
- Denzel 9y ago
  When you say aim for 10 years net: if the company nets $100k/yr, you think it'd be reasonable to ask for a $1M sale? Where does this 10x multiplier come from? I thought the prevailing multiplier (for small SaaS) was 3x net.
  - berkay 9y ago
    multiple is highly dependent on the growth rate, and makes no sense to talk about it without knowing how fast the company is growing. $100k/year growing 100% is very different than growing 10%.
    - jacquesm 9y ago
      If it was growing 100% per year do you think the ggp would be interested in selling?
  - jacquesm 9y ago
    From experience this is what you should be able to get if you negotiate hard and have more than one interested party at the table. If you can find only one taker and they are aware of it you will see a much lower value. Also: for less than 10x net, if is growing steadily just hold on to it for a little while longer, but do continue to talk to interested parties, you will meet your goal sooner or later. Patience is the big secret to successful negotiation.
- mbesto 9y ago
  From one M&A advisor to another - this is good advice.

imjk 9y ago

https://training.kalzumeus.com/newsletters/archive/selling_software_business https://training.kalzumeus.com/newsletters/archive/selling_s...

tlb 9y ago

Buying small websites is a hard business, because you have to maintain them. If one engineer can maintain 10 sites, it costs $2k/mo to maintain each, so the gross profit has to be well above that to make a business out of it. Maintaining 10 sites, each written independently with their own tooling choices, requires an engineer with a very large cranium.

thomaslangston 9y ago
It can be done if you pair it with an agency model. You keep multiple devs on hand who treat the sites as internal clients. Over time if you keep making acquisitions, you have less and less need to keep the external client pipeline full. Example - http://www.simplefocus.com/ http://www.simplefocus.com/

jacquesm 9y ago

Find a couple of your competitors and set up a bidding process, that is probably the best way to get the maximum out of a company like that. Aim for 10 years net or so, and be sure to stipulate that you reserve the right to refuse all offers. I've written up a HN thread about this subject a long time ago: https://jacquesmattheij.com/how-to-sell-your-company https://jacquesmattheij.com/how-to-sell-your-company

Denzel 9y ago
When you say aim for 10 years net: if the company nets $100k/yr, you think it'd be reasonable to ask for a $1M sale? Where does this 10x multiplier come from? I thought the prevailing multiplier (for small SaaS) was 3x net.
- berkay 9y ago
  multiple is highly dependent on the growth rate, and makes no sense to talk about it without knowing how fast the company is growing. $100k/year growing 100% is very different than growing 10%.
  - jacquesm 9y ago
    If it was growing 100% per year do you think the ggp would be interested in selling?
- jacquesm 9y ago
  From experience this is what you should be able to get if you negotiate hard and have more than one interested party at the table. If you can find only one taker and they are aware of it you will see a much lower value. Also: for less than 10x net, if is growing steadily just hold on to it for a little while longer, but do continue to talk to interested parties, you will meet your goal sooner or later. Patience is the big secret to successful negotiation.
mbesto 9y ago
From one M&A advisor to another - this is good advice.